On a few occasions in the past, we have asked our readers to suspend their opinions of a biotechnology company from a capital structure and management perspective and to instead focus primarily on the science that underpins its operations.
One of the companies for which we have requested just that is US Stem Cell Inc (OTCMKTS:USRM).
Way back in March, we published this piece, titled US Stem Cell Inc: Look Beyond The Metrics. At the time, the company traded for around $0.03 a share. Over the subsequent couple of months, and in parallel to our continued coverage, US Stem Cell ran up to highs of $0.15 and $0.12 a share in early April and late May respectively.
During the middle of this month, the company gave up a large portion of its appreciation to dip back down to June lows of $0.03 a piece – the price at which we first highlighted it back in March. In response to this decline, we called a near-term turnaround, and that’s exactly what we got.
Right now, US Stem Cell goes for $0.06 and, for us, the closing of the gap between current levels and the above-mentioned highs is almost a sure thing.
Market are yet to respond to the company’s most recent news, which represents a major step forward for US Stem Cell in terms of validation of its lead technology and the primary application of this technology to the healthcare space.
Specifically, the news details the publication of a preclinical trial of US Stem Cell’s osteoarthritis treatment. The science that underpins this treatment is pretty much the same across the whole spectrum of different target indications and that’s why this validation is so important. Basically, the company removes fat cells from the patient through liposuction and then extracts stem cells from this removed fat. It then injects the stem cells (directly) into the region of the body for which the patient requires treatment.
In the case of osteoarthritis, which is the indication in focus here, the region of the body is behind the knee. The idea is that the stem cells can help to regenerate the damaged cells that are causing the problem. Again, in this instance, it’s all about cartilage degradation and regeneration to relieve pain.
So, the study in question involved ten patients, each of which underwent liposuction to remove the above-noted fatty stem cells, which were subsequently injected into their knees. The patients were then subject to a follow-up with measurements taken at various points (and against various industry standard criteria) to assess the impact of the treatment.
The latest press release details the publication of the results of this study in the Journal Of Translational Medicine, which readers looking for some detail can check out here.
To summarize, the primary method of assessing osteoarthritis severity is what’s called The Western Ontario and McMaster Universities Osteoarthritis Index, or WOMAC, score, closely followed by the six-minute walk distance (6MWD) test.
For the ten patients involved in this study, the average WOMAC score came in at 64. An improvement in WOMAC correlates with a decline in the score, so the study was looking to prove that treatment with US Stem Cell’s technology could decrease WOMAC (and increase the distance a patient can walk as measured by the 6MWD).
And the data shows exactly that.
Across the ten patients, average WOMAC reduced to 52 at 3 months, 46 at 6 months, 42 at 1 year, 38 at 1.5 years, and 41 at 2 years. This is after one round of treatment. All of these reductions were statistically significant, recorded at p-values of 0.01 or less. Similarly, the treatment resulted in a statistically signiﬁcant improvement in the 6MWD test at 3 and 6 months and 1, 1.5, and 2 years post treatment.
Basically, the treatment works.
There are some limitations to this study, primarily that the sample size was small and that there was no placebo arm to control against impact. Further, the treatment’s impact on cartilage (which in osteoarthritis is a key success indicator) remains unclear.
With that said, there are a number of studies ongoing targeted at building on this evidence and we expect US Stem Cell can collect enough data to justify a clinical advance in the US with the FDA near term. Once such an advance materializes, this stock is going to really take off.
Cash is always an issue so keep an eye on dilution. Management raised $5 million earlier this year but an extensive clinical program (even with a small sample size) can burn through this sort of cash pretty quickly.
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Image courtesy of Joseph Elsbernd via Flickr
Disclosure: We have no position in USRM and have not been compensated for this article.